Title: On long-term decisions in public policy : three essays in political incentives, public health, and project evaluation
Authors : Ponta, Oriana
Advisors / Reviewers : Gersbach, Hans
Filippini, Massimo
Extent : 193
Publisher / Ed. Institution : ETH-Zürich
Publisher / Ed. Institution: Zürich
Issue Date: 1-Apr-2014
License (according to publishing contract) : Licence according to publishing contract
Series : Diss. ETH
Series volume: 21190
Language : English
Subject (DDC) : 320: Politics
Abstract: This thesis analyzes long-term decisions in three distinct policy contexts, each one employing a specific methodology within the realm of mathematical modeling. Beginning in the abstract world of a game-theoretical model we study incentive mechanisms for politicians (Part I), then take empirical steps with the construction of an overlapping-generations model aimed at quantifying the long-term impact of AIDS (Part II). Finally, in Part III, we take up the tools of risk analysis and turn our attention to the more circumscribed question of whether a large-scale development project is both sustainable and profitable in the long run. In essence, Part II and III seek to generate information for policy design. Whether this information will be translated into successful policy, depends crucially on the incentives given by the institutional system to those in charge. This is the perspective we take in Part I. Our results follow. Part I: We propose a pension system for officeholders that simultaneously incentivizes performance and preserves willingness to implement long-term policies during their last term in office. Interestingly, it is the offer of a choice that realizes the incentive mechanism, by aligning the politicians’ personal interests with welfare goals. We prove that the proposed system is optimal under the assumption that implementing long-term policies is of sufficient importance for society. The strategy underlying the pension mechanism can also be generalized to improve welfare in non-last-term situations. Part II: Despite a decrease in infection rates and improved access to antiretroviral medication, Kenya still faces a long-wave of premature adult mortality due to AIDS. We find that AIDS will cause a setback in household investment in secondary and tertiary education over the next two decades. This effect, combined with the estimated increase in mortality, will have a significant impact on GDP per capita, which will persist until at least 2040. On the basis of the model, an expansion of existing medication programs is warranted purely on economic grounds. Aside from its application to other countries, the versatility of the model’s structure enables its application, when appropriately tailored, to other enduring epidemics that share characteristics with AIDS, such as malaria and tuberculosis. Part III The final project demonstrates how a classical cost-benefit setting for the evaluation of a development project can be extended to perform risk analysis. We illustrate this process using the Private Irrigation Promotion Project in Niger led by the World Bank between 2003 and 2008. Our analysis shows that the program is sustainable in the long-term, taking into account risks posed by unfavorable variations in crop prices, input prices, and crop yield, as well as deterioration of irrigation infrastructure and general financial shocks.
Departement: School of Management and Law
Organisational Unit: Institute of Public Management (IVM)
Publication type: Doctoral Thesis
DOI : 10.3929/ethz-a-010117506
URI: https://digitalcollection.zhaw.ch/handle/11475/17679
Appears in Collections:Publikationen School of Management and Law

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